by Atul Hatwal
John McDonnell might have a history of ranting radicalism, but he offered a different approach in his speech to Labour conference.
The florid attacks on austerity and business were familiar but the policy content wasn’t quite as red in tooth and claw as his previous rhetoric might have suggested.
Talk of paying down the deficit, briefings to the press on signing Osborne’s fiscal charter and new caveats on implementing Peoples Quantitative Easing (also known as printing money) show how sails have been trimmed.
At conference, there’s been some head-scratching. What’s McDonnell doing?
Labour’s shadow chancellor is fermenting a Special Brew version of Milibandism.
Harsher, more pungent and stronger than the beverage offered by Labour’s last leader, but a version, nonetheless.
Ed Miliband clearly didn’t like the idea of cuts to public services, John McDonnell committed to avoiding any cuts altogether.
Ed Miliband spoke in abstract terms about predators and producers, John McDonnell named Starbucks, Amazon, Google and Vodafone.
And Ed Miliband worried about welfare cuts, McDonnell promised there would be none.
However, in common with Milibandism classic, McDonnell’s speech left a trail of questions unanswered.
He talked blithely about using funds from economic growth and crackdowns on tax avoidance and corporate welfare to avoid austerity.
This might sound good in a Labour conference speech and offer up some easy clap lines but Ed Miliband’s position unravelled on the specifics.
John McDonnell is just as vulnerable.
Seema Malhotra, the shadow chief secretary to the Treasury, went on the Daily Politics with Andrew Neil immediately after the speech and endured a painful dissection of Labour’s missing policy detail.
How would tax avoidance be stopped? How much could be recovered? Which corporate taxes would go up to reduce the deficit? How much deficit reduction would be from these sources?
She tried to respond but the cupboard was bare.
This is why McDonnell is offering a punchier version of Miliband’s economics, not something fundamentally different.
He’s dodging the same questions.
Just like Miliband, McDonnell seems to be worried by the response of the public to higher taxes and borrowing, so he falls back on intangibles like growth and tax avoidance.
And as with Miliband, the Tories will skewer McDonnell on the lack of specifics and confirm public doubts about Labour and economic competence.
The key difference with McDonnell’s Special Brew Milibandism, is that the hangover is going to be that much worse.
Labour will soon be perceived as being even more anti-business and even less trustworthy with the public finances than at the last election.
Welcome to the new politics. Not so different to the old politics.
Atul Hatwal is editor of Uncut
Tags: Atul Hatwal, economic policy, Ed Miliband, John McDonnell, Labour conference 2015, Special Brew
Seema Malhotra, the shadow chief secretary to the Treasury, went on the Daily Politics with Andrew Neil immediately after the speech and endured a painful dissection of Labour’s missing policy detail.
She said that unpaid tax due to corporate tax avoidance was NOT the previously quoted £120B but in the range £3B to £20B..
Hmm that’s not fiscal irresponsibility but more total utter incompetence.. Juvenile mistake. You start low and end up higher = everyone happy. You start high and end up much lower – an average 10 times lower – and you look like an ignorant fool and everyone is unhappy.
Financially incompetent.. that comes from having as adviser Richard Murphy.. A man who calls “capital allowances for investment” a susbidy to capitalists. Any semi competent accountant would know they are not and understand that depreciation is not tax allowable but is replaced by capital allowances.. (I was an accountant)
Frankly this makes Ed Balls look a genius..
So Corbyn’s financial plans have a £120B black hole where there is between £3B to £20B at most.
It’s pure and utter ignorance of the ABC s of company taxation.
“Moronic” is a kind word to use.
“Talk of paying down the deficit”
You cannot pay down the deficit, goddamit! There is a difference between debt and deficit! The deficit is the annual overspend. Running a deficit produces continually growing debt.
When someone talks about “paying down the deficit” their credibility drops to zero.
All QE is printing money atwul including the £375billion shelled out by osborne to stop the recession turning in to depression.
Yes malhotra was a lamb to the slaughter which is why neil moans that neither cameron nor osborne have been interviewed by him for eight years.
As mcdonnell said austerity is a political choice -just wait until next april when the tax credit cuts come in.
No point in providing detail now -osborne would only nick the best bits.
Just keep saying we will eliminate the deficit thats all the public want to hear .
The problem, Atul, is that it is difficult to explain to the electorate that the deficit is really no problem at all, especially with inflation at 0%. Not that its ever been much of problem since the pound floated.
It is also difficult to explain to the electorate that the government cannot control its own deficit. George Osborne has discovered that the hard way!
Simply, if savers (mainly the central banks of the big exporters) wish to purchase gilts, there is little the government can do to stop them. If they don’t issue the gilts the pound slumps. If they do issue gilts the govt has to deficit spend the proceeds back into the economy or the economy slumps.
So which would you prefer, Atul?
Having got everything comically wrong in the election process, you have a chance to redeem yourself by engaging in a sensible economic discussion! Go on, give it a go. What do you have to lose?
0705 – over half the £375bn QE was done when Brown was PM. And surely tax credits are a subsidy to business that incentivises low pay – the sort of bung McDonnell will cut? So, low income workers will get hammered while welfare recipients will be protected?
Peter Martin – deficit no problem? And Govt can’t control economy? If it can’t control the economy, which is true, it only has partial control over interest rates, also true. Amd when rates go up, which they surely will, a deficit adding to over £1.5trillion national debt will be a very big problem I think, as the cost of servicing that dent balloons, diverting taxpayers resources away from funding public services. I have never understood the assertion that the deficit and national debt are not a problem, unless the plan is to simply default. Please can you explain?
Rallan,
When someone talks about “the annual overspend” their credibility drops to zero.
Any currency issuing government has to be in debt. Otherwise they haven’t issued anything!
Say in year 1 the govt issue 100 million units of a new currency. They get back 60 million in tax. The population have saved 40 million. Govt Debt = 40 million.
Say in year 2 they issue another 100 million but tax back 110 million. They’re in surplus! Yippee! Population Savings = 30 million Govt Debt = 30 million
BUT note where that surplus has come from. The savings of the population have fallen from 40 million to 30 million.
Is that a good thing for the economy? If the Govt paid off its debt completely the population would have nothing. They’d have to resort to a barter economy.
Would that be a good thing?
@ John,
I said the deficit wasn’t a problem when inflation was at or below target. The target is 2% Inflation is 0%
You say “And when rates go up, which they surely will”. Actually the government has total control over interest rates. It can set the short term rate at will. Its currently 0.5%. In the longer term it can control interest rates via QE if it wants to keep them from rising too high.
See my previous post for a simple explantaion of deficits and debts. They are simply an accounting device to be able to provide monetary assets to the non government sector. They can be a problem but only if they cause too much inflation.
If being appointed to shadow cabinet was based on merit, the interview for the job would include a Brillo-like interview to weed out the dullards. Few of the old shadow cabinet could withstand cross-examination with some very notable exceptions
I hope the new intake can explain Labour policy coherently that convinces a sceptical public rather than looking empty headed in painful interviews by parroting the lines Brillo uses when kicking the Tories and hyperbole in a futile attempt to get out of the line of fire whilst trying to give an impression that although they were clueless they cared.
PeterMartin
Please continue to post economic articles.
You just confirm Corbyn supporters appear to know very little about economics.
@madasafish
If you think I’m wrong maybe you can explain HOW and WHY I’m wrong?